Chapter 4 Loan Estimate continued Flashcards
Consummation
When the borrower becomes contractually obligated on the loan.
Is it okay to require supporting documentation to prequalify/preapprove a customer before receiving the intent to proceed or sending the LE?
Yes, because supporting documentation is needed in order to prequalify or be preapproved and they may not have all 6 pieces of information needed for the LE such as the address of the property.
A lender cannot require supporting documents until?
The loan estimate is delivered
A lender cannot collect any money until they receive?
The Intent to Proceed
In what case can a borrower collect money before an intent to proceed?
To cover the cost of pulling a credit report
What are the reasons that a LE does not have to be delivered within 3 business days?
If the application is denied or withdrawn within 3 days of application.
When is the latest that a lender can send a final revised LE to the customer?
No later than 4 business days before closing or consummation.
When can a lender send a revised LE?
When there are changes within the allowed tolerance or if there are changes outside of the tolerances WITH specific circumstances, otherwise the lender cannot charge the higher fee.
What are the acceptable change circumstances to revise a LE with charges higher than tolerance?
-An extraordinary event out of anyone’s control (Act of God)
-Information specific to the consumer or the transaction that the lender relied upon when providing the disclosures that were inaccurate or change after the disclosure. (For example, the appraisal comes back lower than expected and the borrower no longer qualifies for the original product but qualifies for a different one.)
-There is new information specific to the consumer that they lender did not rely on when providing the disclosures.
Acceptable triggers to reset zero and 10% tolerances
- Loan program change
- Appraised value change affecting LTV & Interest rate
- Property repair required
- Adding required flood insurance
- Borrower requests to lock the interest rate, or extension
- Expiration of the original LE after 10 days
- Construction loan settlement delays
- Borrower’s credit score changes
- Borrower’s income or employment changes
- Borrower incurs a new debt that changes DTI
- Borrower’s assets change, which cause u/w approval to change
- Adding or removing borrowers on loan
- Natural disaster that affects the property
- Borrower does not select 3rd party servicer provider on the lender’s SSPL
Total Interest Percentage (TIP)
The total amount of interest that the borrower will pay over the loan term.
Can a mortgage broker service a loan?
NO
A borrower is not obligated on any mortgage loan until they…
sign the closing documents including the Note and Deed of Trust (Mortgage)
What is on page 1 of the LE?
-Main Summary Page of Key Loan Items (Same as CD)
-Payment & Breakdown, Rate, Loan Amount, CC Total
What is on page 2 of the LE?
Closing Cost Details
